Analysis | Critical Connections

South Korea’s Infrastructure Vision

April 24, 2018 |
By Kristine Lee

Since China announced its ambitious Belt and Road Initiative in 2013, South Korea has actively pursued international initiatives that are independent of Chinese goals and priorities. In particular, the Moon administration’s two-pronged infrastructure vision, dubbed the “New Northern” and “New Southern” Policies, offers insights into how midsize powers in Asia might navigate growing geopolitical uncertainty in the region.

Cooperation with Russia is central to the New Northern Policy, which president Moon Jae-in debuted at the 2017 Eastern Economic Forum in Vladivostok. The policy’s so-called “9-Bridge Strategy” proposes expanding South Korea and Russia’s joint infrastructure, including ports, railways, natural gas pipelines, electrical grids, and Arctic shipping lanes. It also aims to increase the two countries’ cooperation on shipbuilding, agriculture, fisheries, and joint industrial complexes.

At face value, South Korea’s search for new markets seems to be the primary motive force behind its vaunted pivot to Russia. Song Young-gil, the head of South Korea’s newly-formed Presidential Committee on Northern Economic Cooperation noted that “the committee’s goal is to discover new growth engines in Northeast Asia” because “South Korea’s economy leans too heavily on the United States and China.” Additionally, as Asian economies become more deeply integrated, South Korea is angling to position itself ahead of the curve.

There are also less overt geostrategic dimensions to South Korea’s New Northern Policy. Its 2016 spat with China over its deployment of a U.S. THAAD missile defense platform concretized South Korean concerns about overreliance on Chinese markets. The United States’ lack of a clear, long-term strategic vision in the Indo-Pacific has also challenged South Korea to revisit some of its long-standing assumptions about the U.S.-ROK relationship. Finally, the Moon administration is using the allure of joint infrastructure projects to create strategic openings to North Korea. Dangling the carrot of South Korean investment in North Korean railway projects and joint industrial complexes could give North Korea a reason not to escalate tensions on the Peninsula. South Korean leadership has calculated that deepening cooperation with Russia through its New Northern Policy offers one relatively low-risk avenue through which it can pursue these objectives.

The New Northern Policy is not without precedent. In 2015, under the auspices of the Park administration’s Eurasia Initiative, South Korea carried out a test run of its Silk Road Express, which sought to expand the Trans-Korea railway and ultimately connect it with Central Asian railway networks, including the Trans-Mongolia and Trans-China railways. The New Northern Policy’s proposals for intermodal transportation infrastructure on the Korean Peninsula are a continuation of these policies. However, North Korea’s steady advancements in its nuclear and missile programs and subsequent UN sanctions have, historically, stymied South Korea’s ambitions to expand its Trans-Korea railway. President Moon, in a time of fresh geopolitical uncertainty on the Peninsula, seems caught in much the same quandary as his predecessors.

In contrast, the New Northern Policy’s strategy of strengthening linkages between Russia’s Arctic shipping routes and South Korea’s shipbuilding industry has been much more immediately fruitful. Russia’s desire to find cheaper, faster ways to transport its liquefied natural gas (LNG) and the Moon administration’s commitment to revitalizing South Korea’s struggling shipbuilding industry has amounted to a powerful convergence of interests. In 2017, Daewoo Shipbuilding won a $4.8 billion deal to build 15 ice-class tankers to transport LNG originating from Russia’s Yamal LNG plant through Arctic waters. The South Korean government has also hatched a $1.9 billion program to help shipbuilding companies win more projects, particularly for LNG tankers.

The second pillar of South Korea’s economic and diplomatic diversification strategy is its New Southern Policy, which aims to bolster its ties with the ASEAN countries. President Moon announced the New Southern Policy during a tour through Indonesia, Vietnam, and the Philippines which coincided with President Trump’s first tour of Asia in November of 2017. By the end of 2017, the Moon administration had outlined a set of core initiatives to strengthen South Korea’s economic cooperation, including trade and energy infrastructure, with the ASEAN countries.

The Moon administration conducted early overtures to Indonesia and Vietnam as part of its New Southern framework. As President Moon unveiled his New Southern Policy, he signed an MOU with Indonesia for a new light rail transit system in Jakarta as part of a series of pacts between the two countries expected to be worth up to $1.9 billion. Simultaneously, South Korea launched a more concerted effort to upgrade its cooperative relationship with Vietnam to one of a “comprehensive partnership.” In a March 2018 summit, the two countries agreed to boost cooperation between their manufacturing industries to reach a target trade volume of $100 billion by 2020. In support of these growth targets, South Korea has also vowed to increase its investments in Vietnam’s infrastructure, including road and airport construction projects.

Ostensibly, South Korea’s New Northern and New Southern Policies stem from a confluence of a unique set of geopolitical circumstances on the Peninsula. In reality, today’s political moment in Northeast Asia bears striking resemblance to the climate of the 1970s in which Sino-American rapprochement brought about a shift from a bipolar U.S.-Soviet power structure in the Asia-Pacific to a more complex, multipolar dynamic. Recognizing the danger of overreliance on the United States, in the 1980s, then South Korean president Roh Tae-woo made northern-centric diplomacy a central tenet of his foreign policy. Roh’s Nordpolitik (the original “Northern Policy”) was, much like its New Northern progeny, aimed at diversifying South Korea’s trade partners and alleviating tension between the two Koreas.

Today, while an erratic North Korea necessitates that Seoul works to maintain the U.S.-South Korea military alliance, it must also actively build cooperation with Beijing as its trade-dependent economy is still deeply tied to Chinese markets. Locked in a precarious geopolitical balancing act between the United States and China, South Korean leaders are simultaneously looking north, south, and west to mitigate risk and diversify its economic partners. As uncertainty about how the two great powers will respond to regional challenges prevails, South Korea is likely to continue to opt for flexible partnerships, such as with Russia, where specific interests overlap or converge.

Kristine Lee is a master's candidate at the Harvard Kennedy School and a recipient of a Fulbright scholarship to South Korea.